The Health Costs of Cost-Sharing
Abstract
The design of health insurance can cause large, abrupt, and arbitrary changes in drug prices.We use this fact to study what happens to patients' health when they stop taking their drugs.Thanks to a quirk in Medicare's drug coverage, 65-year-olds are as-if-randomly assigned a budget-a spending limit on drugs, beyond which they are responsible for 100% of the cost-as a function of their birth month.We find that an exogenous $100 per month decrease in this budget (a 24.4% change) causes mortality to increase by 0.0164 percentage points per month (13.9%).This estimate is robust to a range of falsification checks, and in the 97.4th percentile of 541 'placebo effects' formed in settings that are observably similar, but lack the policy quirk linking birth month to drug budgets.We make sense of this large effect in three ways.First, patients stop taking drugs that not only appear 'high-value' (e.g., blood pressure medications), but are also known to have withdrawal or 'rebound' effects.Harm from abruptly stopping these drugs can be large, dwarfing any foregone benefits of not taking the drug.Second, using machine learning, we identify patients at the highest risk of drug-preventable adverse events (e.g., heart attack).Contrary to the predictions of some economic models of behavior, high-risk patients cut back more than low-risk patients on precisely those drugs that would benefit them the most (e.g., statins).Third, patients appear largely unaware of the risks.In a survey, we find…
How strong is the evidence?
Evidence Hub reads this as a randomized trial, done in people. Its evidence level is 2 of 5 (High · randomized trial). Randomized trials of a reasonable size are the strongest single-study design.
Read the paper
Related studies
- Metformin as an adjuvant in breast cancer treatment
- Metformin Lysosomal Targeting: A Novel Aspect to Be Investigated for Metformin Repurposing in Neurodegenerative Diseases?
- Aberrant HSF1 signaling activation underlies metformin amelioration of myocardial infarction in mice
- Metformin induces ZFP36 by mTORC1 inhibition in cervical cancer-derived cell lines
- Protein Interaction Network for Identifying Vascular Response of Metformin (Oral Antidiabetic)
- Preventing Long COVID With Metformin
Go deeper in Evidence Hub
Evidence Hub adds a study data sheet (design, sample size, evidence level, key numbers), an AI summary and a chat grounded in the paper's text.